The Economy

Floor Speech

THE ECONOMY -- (Senate - September 24, 2008)

Mr. DOMENICI. Mr. President, I didn't get the entire message of the distinguished Senator from Florida. The part of the speech I heard talked about us getting together and working as American Senators, not Republicans or Democrats, in this time of crisis. I totally congratulate the Senator. I agree with him and I believe it is imperative that we do something before we leave.

Today, I hear talk that we have a continuing resolution we have to pass, and then we are finished. I am not hearing that from anybody officially, but it is chattering around. That is the big thing to do.

I must say, that is a frightening thought. If we are thinking of leaving here without doing something to give the Treasury Department of the United States some authority to stabilize the credit system of the United States--if we don't do that and spend time doing that, we don't deserve to be called Senators.

It is hard to explain, but when you look at it, credit and the American credit system--call it the banking system if you would like, but I am calling it the credit system--is what makes America's prosperity available to millions and millions of people. It is the credit system that we set up that has given us the greatest standard of living that any people have ever had.

Something is going wrong with that financial system. It is not a question of Wall Street; it happens to be that Wall Street is the center for some of these
financial systems that I am talking about. But they are going amiss; they are going awry. Something basic is happening, so that the liquidity of the system, which means the money available for the American financial system that I have just spoken of--something has clogged it up. We are told by the experts--and I don't think they have anything to gain. I think the Chairman of the Federal Reserve Board is a distinguished American who never would have thought he was taking on this job when he agreed to be Chairman of the Federal Reserve.

Incidentally, for those who don't know, he has a Ph.D. in economics, but guess what his dissertation was on. It was on the Great Depression. I think we are lucky that we have somebody there who understands the worst of times. He is here, joined by the Secretary of the Treasury, who is not a long-term Wall Streeter. It is only about 6 years that he has been involved in the Wall Street activities as a businessman. He is here begging us, pleading with us, and apologizing that he is not a good speaker. I am kind of saying: Who cares. Just listen to what he says. If you can understand it, pick it up and decide there is something for you to do.

If I sound like I am concerned, I would like everybody to know I have a very large stake in the future. My grandchildren haven't stopped arriving on the scene. I have 13 of them. I have 8 children of my own, and America has been great to all of us. There are millions more Americans like myself.

What is going to happen if we leave here without solving this problem or at least giving the executive branch, through the Secretary of the Treasury, the authority to try to do something to make this system liquid so that money will flow again? If we don't do that and we go home and think we are going to have a Christmas, we are apt to have a Christmas that will shock us all.

We are being told we can have a recession. Those are the words of a mild-mannered Federal Reserve Chairman. That is what he says, we could have a recession. I am quite sure when he is in the back room talking with those experts who advise him and with Secretary Paulson, he says worse than that. He probably says the thing can fall apart because it is all tied together and now it is all going to come untied, this great country, with billions of dollars in securities in the hands of all kinds of countries and people, having the dollar fall and the other signals out there that maybe they are right, that we are getting close to things falling apart.

I have a prepared speech. I asked somebody who is an expert to give me the whole history of the banking system of the United States since 1933. I was hoping I would have time to read it and let everybody know what it was and how it happened and how we as legislators in America didn't quite respond to the banking system as fast as we should. Legislation didn't keep pace with the changes.

So many people are to blame for us getting to where we are. There are plenty of people who abused the system. But if we get hung up trying to find out who did something wrong, then we are going to sit here, with our fingers pointed, in chairs trying to conduct hearings, asking the FBI to do things while the America we know goes down the tube.

I believe it is time for clear thinking, for Senators to say: We have to take this one on the chin. If it is going to hurt politically, it might as well hurt politically while you are doing the greatest thing you could do for your country, and that is save it--save it from economic turmoil. If that is not the case and you don't believe it, then obviously you can leave as Senators or Representatives. Once the CR is passed, you can go home and start your Christmas festivities and start running for reelection. I hope if you do that, when you come back, maybe those of us who will stay and work will not let the system fall apart for you. But if you want to take that chance, do it.

I think my colleagues should be here, not home campaigning. And I think the American people are going to hold you responsible if you don't get this thing solved.

I hear some say we will do a little something. No, no, not do a little something. We have the best people advising us that we have to do this, and there is even a chance if we do this right that we won't lose as much money as we will as if we do nothing; that, in fact, we may lose many more billions of dollars if we don't do something to stop the hemorrhage and at the same time loosen up the money.

I haven't said ``Wall Street'' very often in this speech, and I haven't used the word ``bailout'' because I don't think we are bailing out Wall Street and I don't think it is Wall Street that is the beneficiary of what we are trying to do. Stop and think. Who is involved in this thing called money lending in the United States, credit in the United States? There are millions of people and thousands of institutions that lend money. To whom? To people buying a car, buying a house, buying the Christmas presents for their children, improving the house, buying the lawn mower, buying their third car, and on and on. Those are the people who are using this credit system.

One time off the cuff I didn't know what to speak about before a crowd. I decided to have them guess with me: What is the greatest system that is working in the United States that is beneficial to you on an everyday basis? Of course, nobody could guess what I was going to say. I said: the credit system of the United States. And then I proceeded to tell them why the credit system was one of the best things that America had going for us--not for Wall Street, for us. And the credit system is at stake. If it doesn't work, nothing works. If your credit system doesn't work, you don't buy houses, you don't buy cars, you don't buy toys. Maybe you buy groceries. But if it is broken, who knows what will happen to a country such as ours when we have been so used to so much for so long.

Having said that, I have a little bit more time and I wish to talk a little bit about the history. Maybe I will rethink this for a minute and put it this way. I believe it is imperative that we pass legislation, and I believe that if the consensus is, after saying we want to give the executive branch what they think they need to solve this problem, if the consensus is that we need to add something to that legislation--add oversight, add something on executive pay, whatever the other things are--let's get on with it. Let's do that. Let's sit down with the leaders from the White House, from the executive branch, and say: What do we need in addition to their proposal? And let's talk seriously. I don't see why it would take so long. I don't see why we can't do it.

Incidentally, I was chairman of the Budget Committee when the Resolution Trust Corporation was formed in order to curb the savings and loan crisis in the early nineties. That effort was also very controversial. Yet that effort stabilized the markets and eventually made money for the American taxpayers. Of course, it was much more limited in scope. We were talking about the savings and loan institutions. Some were regulated, some were not regulated, and we were in some kind of a real mess. Some had deposit insurance that was adequately covered, some didn't. We had to take over their assets and then dole them out. Some people made a good deal and bought them cheap and made money. People focused on that and said what a dumb thing we did because some people made money on the buyouts from this Resolution Trust Corporation. In the end, when we added it all up, it made more money than it lost, and it saved the system. In the process, a lot of purification occurred, a lot of cleaning out occurred.

The same is going to happen here. I am no expert on the difference between then and now, the Resolution Trust Corporation problem that was being solved and the problems we are going to solve now, but clearly there are many similarities. We were frightened. When we heard the first reports about how much we might lose, there were many who supported it who didn't want to go home, they wanted to hide their heads under the desks because it was so many billions of dollars. This one is going to be worse, and if we don't decide to fix it, there are not going to be any desks to hide under, in my opinion.

The other problem we have is we haven't told the American people that this affects them. They have been told, because of the way it was presented, ``Wall Street,'' ``bailout,'' those famous words--it has been presented as if it doesn't have anything to do with the people on Main Street and in our shopping centers across America and those who are selling and buying houses anywhere in America or buying cars from their local dealerships. It applies to all of them.

If liquidity, the liquid money flowing, stops for any period of time, all of those are affected. And guess who is at the end of each of those. The American people. They are all going to be affected. In fact, I am quite sure many thousands of Americans are worried today as to what they should do with their money, with their savings. We need to build some confidence back into the system and in them. We need to stabilize the system and build confidence in the American people by us being confident, by speaking out that we intend to do this, and by doing it we are going to save this credit system in the United States which applies daily to each American in a different way, but is their credit system, the credit system of the people of this country.

The history of the banking system in the United States is clearly an interesting one, and I believe rather than give it today, I will reserve it--I know I will have another opportunity to speak--and change the tenor of my remarks today from the history of the banking system to my version of the problem, from the top of my head as I think and look at a few words, what I think the problem is and what I think our responsibility is.

I once again say that before we leave here, we have a responsibility to face up to what could be the greatest economic crisis America has ever seen. If it isn't that big, we don't understand it. We are being told by those who know that it is that big, that it could be the biggest economic crisis we have ever had. I tend to believe these two gentlemen. I have heard them. I don't know them. I listen to them. I have no idea why they would be telling us this if it were not that they truly believed it was the fact as they gathered the facts from this enormous credit system of the United States.

I repeat, we are fortunate that the two experts are truly expert on matters similar to the ones we are facing. I didn't know about the good doctor who is Chairman of the Federal Reserve until I was preparing for this speech and for these hearings, that not only is he an economist but his expertise is in the Great Depression. No wonder he talks so confidently about what might happen if we do this or that.

Who are we going to believe if we don't believe people such as them? Who are we going to believe if we don't believe the Secretary? The Secretary worked so hard yesterday. I was around him late in the afternoon. I thought maybe he ought to go home and rest, he had worked so hard. He truly is trying to tell us with two red flags--if he could hold five of them--he is trying to tell us there is a big problem and we better start solving it. Don't be worrying too long how big the fire is or how big the fire hose has to be. We know how big the problem is. It is either as big as they say, or we have to guess and say we, as Senators, with no expertise in this area, no more than that, we are going to guess. I don't choose to do that. I don't think that is why we are here. This is a complicated system. The credit system of the United States is complicated. They have narrowed it down to five or six major events and now the big one that will wrap it up. We better help them or we better be prepared to face the consequences ourselves as individual American Senators.

I yield the floor and thank the Senate for listening.

Source